Address to the Association of Independent Retirees 9th National AGM and Conference

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Interternational Monetary Fund; Australia’s Executive Director
October 5, 2000
Credit cards, Telecards, interest rates, dollar/current account
October 12, 2000
Interternational Monetary Fund; Australia’s Executive Director
October 5, 2000
Credit cards, Telecards, interest rates, dollar/current account
October 12, 2000

Address to the Association of Independent Retirees 9th National AGM and Conference






I am delighted

to have the opportunity to officially open the annual national conference of the

Association of Independent retirees.

The Prime Minister has asked me to pass on his best wishes to you, Maureen, and all

the delegates. Unfortunately he is unable to be here today because he is in Adelaide,

where he will attend the memorial service for former South Australian Premier, Dr David


The theme of this year’s conference is ‘celebrating a decade of growth’.

And it certainly has been an impressive decade of growth for the Association.

Ten years ago the Association of Independent Retirees was established with a single

branch in Queensland. It now has 77 branches and 16,000 members across the country

representing the interests of all self-funded retirees.

The impressive growth of the Association over the past decade reflects a number of


Certainly the profile of self-funded retirees has increased greatly over this period.

There has been growing recognition in the broader community of the benefits of

self-funding for retirement.

These benefits include the direct gains in higher quality lives in retirement and

independence for those who achieve self-funded status. There are also vital benefits for

Australia that flow through the greater national savings and investment accumulation

associated with the building and holding of retirement savings, which benefit the whole


There is also greater respect and support for the personal effort that it takes for

people to save for their retirement.

The Association of Independent Retirees has clearly been very active and successful in

representing the interests of self funded retirees. It has played an important role in

promoting greater recognition of the place of self-funded retirement within the overall

community. But a consequence of the growing number of self-funded retirees is that they

have a very vital interest in the success of a broad range of public policies that both

directly and indirectly affect them. And it is in this regard that the Association of

Independent Retirees has played a particularly active role, and one that the Government

welcomes. The number of Association branches has grown so rapidly over the past decade

because of the quality of the input the Association has made on policy issues that impact

on its members

For example, the Association has provided very helpful contributions to the Government

on such issues as:

  • the simplification and expansion of the Commonwealth Seniors Health Card;
  • elements of tax reform for older Australians;
  • the development of a National Strategy for an Ageing Australia; and
  • dissemination of information on tax reform and other government initiatives via the

    association’s quarterly newsletter, The Independent Retiree.

The growth of your association and other groups representing the retired is bound to

continue. It is estimated that there are currently 3.2 million retired people aged 50

years and over, with financial assets of at least $133 billion and $278 billion in housing


The population of the retired aged 50 plus is expected to grow to 3.6 million by 2005,

4.1 million by 2010 and 5.2 million by 2020. The retirement of the baby boomers, along

with the growth in superannuation and other assets, will create a growing demand for

organisations representing retirees.

But with this message of growth in the numbers of retirees comes two vital corollaries.

First, we must ensure that there is continuing effort made to encourage self-funding of

retirement. That means continued strong growth in retirement savings.

And second, we must ensure that those savings are put to good use generating solid

returns. To a very considerable degree, that means ensuring that Australia itself is a

country that continues to enjoy strong income and asset growth.

In this respect, self-funded retirees have a direct interest in a strongly performing

Australian economy

Growth in the Australian Economy

Like the Association, the Government has also delivered an impressive and sustained

period of quality growth, in this case, economic growth. We have achieved thirteen

consecutive quarters where the Australian economy has been growing by over

4 per cent in through the year terms. This is the longest continuous period of

growth since the quarterly National Accounts commenced in 1959.

Unlike past periods of economic growth, Australia has enjoyed strong economic and

employment growth in conjunction with low inflation.

  • Since the Government was elected in March 1996, increases in the CPI have averaged

    1.4 per cent per annum (significantly less than the 2.4 per cent 

    increase in inflation recorded in the US over the same period). This compares with average

    rates of inflation of around 8 per cent over the 1980s.

  • High inflation is the number one enemy of those living on their savings in retirement.

    There is nothing more insidious than high inflation eroding the value of retirement


Strong productivity growth has been a key factor in Australia’s low inflation

performance Labour productivity growth in the market sector in Australia has been around

3.5 per cent per annum since the Government came to office. This is well above the

experience of the 1980s, and represents the outcome of the Government’s pursuit of a

major microeconomic reform agenda.

  • In fact, the IMF’s recently released World Economic Outlook, shows that for the

    period 1996-99, Australia has recorded one of the highest levels of labour productivity

    growth amongst the faster-growing advanced economies, and has achieved higher productivity

    growth than the US.

Sustained strong economic growth, low inflation and the benefits of labour market

reforms have underpinned ongoing growth in employment and further falls in

Australia’s unemployment rate. Indeed, at present, Australia’s unemployment rate

of 6.4 per cent is around the lowest level seen in over a decade.

The ongoing trend of rising labour force participation and falling unemployment means

that an increasing number of Australians are joining the ranks of the employed and sharing

in the benefits of a strong economy. Increasingly, these opportunities are being shared by

teenagers and the long-term unemployed.

Australia’s strong economic performance is largely the result of sound and

transparent macroeconomic policies.

But we also have an economy that has been made more flexible and resilient through an

ongoing structural reform agenda. This reform agenda has also delivered significant

benefits to self-funded retirees.

Let me now turn to some of these other critical policy areas.

The new tax system

The most significant of these new reforms has been the modernisation of the Australian

taxation system.

Under the new tax system self-funded retirees benefit from substantially lower income

tax rates, two new savings bonuses, an increased Low Income Aged Persons Rebate, greater

access to age pension payments, enhancements to company tax arrangements and the 30 per

cent rebate available on the cost of private health insurance.

A key feature of the Government’s new tax system is the significant reductions in

personal income tax, through an increase in the tax free threshold and a cut in all

marginal tax rates, except the top rate. Self-funded retirees, in particular those on low

to moderate incomes and who face a tax liability, will keep a higher proportion of the

income they receive.

The Government also introduced special new arrangements to help maintain the value of

the savings of senior Australians following the introduction of the GST. A one-off,

non-taxable Aged Persons Savings Bonus of up to $1,000 for each eligible person aged

60 years or more on 1 July 2000; and a one-off, non-taxable Self-Funded Retirees

Supplementary Bonus of up to $2,000 for each eligible person aged 55 years or more who is

not in receipt of a Commonwealth income support payment.

The value of the age pension will increase by 2 per cent in real terms as a result of

the New Tax System. Means test thresholds will also increase.

When this Government came to office, it introduced the Low Income Aged Persons Rebate

which ensured that a large number of self-funded retirees are freed from income tax. Under

the new tax system this rebate has been increased by a further $250 a year for a

single self-funded retiree and $175 a year for each of a self-funded retiree


A very significant benefit from the new tax system for members of the Association of

Independent Retirees is the reduction in the pension withdrawal rate from

50 per cent to 40 per cent. As a consequence many members of the

Association will receive a significant increase in their part-rate age pension or, for the

first time, will become eligible to receive an amount of age pension.

Self-funded retirees can also benefit from the redesigned company tax arrangements,

whereby excess imputation credits are refundable to individuals and complying

superannuation funds. This means that self-funded retirees now bear overall tax on their

investments in companies and unit trusts at rates no higher than their marginal tax rates.

Where self-funded retirees do not pay tax they receive a refund of their imputation


In addition, members of the Association can benefit from the Government’s new

capital gains tax arrangements, whereby only 50 per cent of nominal gains are

taxed, where the assets are held for at least one year. This means that the highest rate

of capital gains tax for individuals will effectively be no more than

24.25 per cent. For 90 per cent of Australians, it will be less than this


Since 1 January 1999, as part of the new tax system, self-funded retirees have been

able to benefit from the 30 per cent tax rebate/benefit available on the cost of private

health insurance. This is of great assistance to your members – many of whom have

always maintained private health insurance

Retirement income reforms

Another important reform area for your membership is retirement income policy.

Australia’s retirement income policy is designed to ensure that Australians have an

adequate income available to support themselves in their retirement years. It is comprised

of a three-tier approach: compulsory employer superannuation contributions; voluntary

superannuation savings; and the age pension.

Persons with low superannuation income in retirement are protected by the age pension

safety net, while those with slightly higher superannuation or other incomes in retirement

are entitled to also receive part age pension payments and those with high superannuation

incomes in retirement benefit from concessional tax treatment.

This three-pillar approach to retirement income policy has been broadly endorsed by the

World Bank.

The Government is a strong believer in encouraging self-reliance and assisting people

to help themselves – traits much in evidence in independent retirees. Since coming to

office the Government has also continued to provide incentives for those who help

themselves, including introduction of the Pension Bonus Scheme, a voluntary scheme which

encourages older Australians to defer claiming the Age Pension in favour of continuing to

work. A tax-free lump-sum bonus is provided once Age Pension is claimed.

The Government has exempted life or life expectancy income streams from the age pension

assets test and given all complying income streams a full purchase price deduction for

social security purposes.

The government has introduced a $500,000 capital gains tax exemption on the sale of a

small business where the proceeds are rolled into a superannuation fund.The Government has

also made changes to superannuation rules to enable people who remain in the workforce

after age 65 to continue to make contributions up to the age of 70.

More recently, the Government has identified simplification of superannuation as a

future area of major reform – but not until tax reform has been well and truly bedded



The Government recognises that health care is a crucial issue for older Australians. In

the 2000-01 financial year we will provide more than $17.7 billion to ensure that

Australians have access to high quality medical services, medicines and public hospital


  • This includes around $7.5 billion for medical services, $3.9 billion for medicines and

    $6.2 billion for public hospital services.

The Government has also introduced a number of successful measures to reduce the cost

of private health insurance, increase private health insurance membership and reduce

hospital waiting lists. At the end of the June quarter, the proportion of people with

insurance for hospital care had risen to 41.2%, the sixth consecutive quarter of increased


Other initiatives to address the health care needs of older Australians include:

  • Improved access to cheaper medication and assistance to manage medication better.
    • Income test changes for the Commonwealth Seniors’ Health Card, made in

      January 2000, resulted in 200,000 more people having access to cheaper medication.

    • The latest Community Pharmacy agreement provides $114 million over 5 years to

      enable pharmacists, in co-operation with doctors, to help older Australians to properly

      manage the various medications they receive.

  • The Government’s 1999 Budget measures, worth $171 million, aimed at enhancing primary

    health care. The package includes:

    • Health assessments for older Australians, introduced on 1 November 1999 and available to

      people aged 75 and over and Aboriginal and Torres Strait Islander people aged 55 and

      over. So far more than 20,000 voluntary health assessments have been undertaken.

    • Expanding the role of general practitioners in health care for older Australians, with

      better-integrated health care for people with chronic conditions and multiple care needs.

    • A four-year $14.4 million initiative to improve the quality of life for older

      Australians with chronic conditions, launched in February 2000. It targets the four

      million Australians with chronic conditions such as cardiovascular disease, diabetes,

      chronic lung disease and mental disorders.

Regional Health and Aged Care

This year’s Budget also included a $562 million Regional Health Strategy which is

the largest-ever effort by an Australian government to improve rural health. The strategy

builds on our earlier initiatives and aims to ensure that older Australians living in

regional, rural or remote have access to more doctors and better health services. It

provides (over four years):

  • $210 million for more health professionals in country areas;
  • $162 million to further doctors’ and medical graduates’ training and educational needs;


  • $185.8 million to put more health services into regional Australia, which includes

    $30.8m to assist rural aged care facilities with their day to day operating costs and in

    upgrading their facilities to continue providing aged care in rural areas

Aged and Community Care

A further important issue to the Association is that of aged and community care. Over

17,000 residential aged care places and community aged care packages have been allocated

to areas of need across Australia since the Coalition Government came to office. The

Government is also working to improve the quality of care given to older Australians in

residential care facilities.

The Government is serious in getting poor quality aged care providers out of the

industry. The Aged Care Standards and Accreditation Agency has been established to monitor

standards of care and to assess facilities against the accreditation standards. The

accreditation standards were developed in conjunction with provider and consumer

stakeholders. All aged care facilities must be accredited if they are to receive

Commonwealth funding after 1 January 2001.

The Government recognises that most older Australians would prefer to remain in their

own homes and in the community and receive the support they need to do so. The Government

is implementing the $280 million Staying At Home Package and announced in this year’s

Budget that it is establishing a separate Home Care program for eligible veterans. This

will allow the Home and Community Care Program to expand its services to around 20,000

more people in the general community

Maureen Kingston’s retirement

In closing, I would like to pay particular tribute to Maureen Kingston who is retiring

after ten years with the Association of Independent Retirees. Maureen was a foundation

member of the Association in 1990, its first National President from 1992 to 1996, and

again from 1998-2000, and its first Honorary Life Member.

She has been a familiar figure around Parliament House and other institutions as a

tireless advocate, not only for the Association of Independent Retirees, but for older

Australians and her community in general. The recognition she has received at the State

and Federal level, including the Medal of the Order of Australia (in 1995), attests to her

compassion and community spirit.

Maureen’s achievements serves as a reminder of how much can be done through

constructive social partnerships between government and community organisations. They also

serve as a valuable reminder of the active contributions many older Australians make to

our communities.

I can assure you that Maureen was an active, intelligent and persuasive advocate on

your behalf as we went about designing the New Tax System.

It gives me considerable pleasure to declare open the ninth annual conference of the

Association of Independent Retirees and I hope you have a very productive and enjoyable